Section 11(5) of the Income Tax Act

Income-tax Act, 2025: ss.332–355

Section 11(5) falls under section 11 of the Income-tax Act, 1961, which corresponds to sections 332 to 355 of the Income-tax Act, 2025, the provisions on registered non-profit organisations.

Read the 2025 provisions

Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.

The decision most relied on for Section 11(5) is 1. Father Mullers Charitable Institutions 363 IT 230 (Kar.) 2. DIT(E) v. Sheth Mafatlal Gagalbhai Foundation Trust (249 ITR 533), cited in 108 of the 401 judgments on BharatTax that turn on this section.

Leading authorities on Section 11(5)

1. Father Mullers Charitable Institutions 363 IT 230 (Kar.) 2. DIT(E) v. Sheth Mafatlal Gagalbhai Foundation Trust
249 ITR 533 · 2001 · High Court
108
citing judgments

Income of a trust that is taxable at the maximum marginal rate should be taxed accordingly, while other income is eligible for exemption under Section 11 of the Income-tax Act.

Commissioner of Income-tax v. Nizam's Suppl. Religious Endowment Trust
127 ITR 378 · 1981 · High Court
87
citing judgments

Income of a charitable trust, other than from a business undertaking covered by Section 11(4), is determined based on its books of account. Payments of income tax and wealth tax by the trust are considered an application of income for charitable purposes under Section 11.

Trust (249 ITR 533) (Bom.) 3. CIT vs. Red Rose School (163 Taxman 19 (All.) 4. DIT(E) v. Alarippu (
172 ITR 698 · 1988 · High Court
61
citing judgments

Income received by a trust from sources like extra fees can be taxed at the maximum marginal rate, while other income remains eligible for exemption under Section 11 of the Income Tax Act.

Dy. CIT v. Zuari Estate Development and Investment Co. Ltd.
373 ITR 661 · 2015 · Supreme Court
61
citing judgments

Reopening of assessment beyond four years under Section 147 requires strict satisfaction of conditions precedent, including fresh tangible material, and cannot be based on a mere change of opinion from the original assessment. Further, debatable or interpretational issues cannot be adjusted during processing under Section 143(1).

ACIT v. A.L.N. Rao Charitable Trust
216 ITR 697 · 1995 · Supreme Court
58
citing judgments

The exemption for income accumulated under section 11(1)(a) (presently 15%) is absolute, and section 11(2) does not restrict its operation or require such accumulated income to be invested in specified securities. Investment requirements under section 11(2) apply only to accumulation beyond this absolute exemption limit.

Bureau of Indian Standards v. DGIT
358 ITR 78 · 2013 · High Court
58
citing judgments
Bombay in Bajaj Auto Finance Ltd. v. CIT
93 Taxmann.com 63 · 2018 · High Court
53
citing judgments

The Assessing Officer cannot make a prima facie adjustment to the total income under Section 143(1)(a) if the adjustment involves a debatable issue.

GSI India v. DGIT (Exemption)
360 ITR 138 · 2014 · High Court
51
citing judgments

Charging fees, even when having regard to the economic status of beneficiaries, is permissible for the sustenance of charitable activities, provided it is necessary for operation and running expenses and does not amount to carrying on trade or commerce. This applies even after the introduction of the proviso to Section 2(15) of the Income Tax Act, 1961.

DIT (Exemption) v. Jasubhai Foundation
374 ITR 315 · 2015 · High Court
45
citing judgments

A charitable trust can claim exemption for specific income streams under Section 10, such as dividend income under Section 10(34), independently of the provisions of Section 11. Income exempted under Section 10 is not restricted or overridden by Section 11 for trusts.

Delhi Stock Exchange Association Limited v. CIT
41 ITR 495 · 1961 · Supreme Court
43
citing judgments

Entrance fees and one-time membership fees received by an association from new members are classified as revenue receipts for the purpose of income tax assessment.

Judgments on Section 11(5)

Chevalier P J Cherian Arts and Cultural Foundation, Ashok Nagar vs. Ddi Exemptions, Chennai

In the result, appeal filed by the assessee is allowed for statistical purposes

ITA 702/CHNY/2024[2021-2022]Status: DisposedITAT Chennai04 Sept 2024AY 2021-2022

Bench: Shri Mahavir Singh & Shri S.R. Raghunathaआयकर अपील सं./Ita No.702/Chny/2024 िनधा"रण वष" /Assessment Year: 2021-22 Chevalier Pj Cherian Arts & The Ddi (Exemptions), Cultural Foundation, Vs. Chennai. 45, First Avenue Ashok Nagar, Chennai – 600083. [Pan: Aaaac 8002B] (अपीलाथ"/Appellant) (""यथ"/Respondent) अपीलाथ" की ओर से/ Assessee By : Shri P. Ravichandran, Ca ""थ" की ओर से /Revenue By : Shri N. Sanjay Gandhi, Jcit सुनवाई की तारीख/Date Of Hearing : 13.06.2024 घोषणा की तारीख /Date Of Pronouncement : 05.09.2024 आदेश / O R D E R Per S.R. Raghunatha, A.M : This Appeal By The Assessee Is Arising Out Of The Order Of The Commissioner Of Income Tax (Appeals)-1, Surat [Hereinafter “Cit(A)] In Din & Order No. Itba/Apl/S/250/2023-24/1060188727(1), Dated 29.01.2024. 2. The Assessee Has Raised The Following Grounds Of Appeal. 1. The Orders Of The Assessing Officer & The First Appellate Authority Are Contrary To Law. 2. The Denial Of Exemption Under Section 11 To The Extent Of :- 2 -: Rs.16,60,000/- Is Contrary To Law When The Appellant Had Filed Form 10 Along With The Necessary Resolution For Accumulation Of Income. 3. The Denial Of Exemption By The First Appellate Authority On The Grounds That The Audit Report In Form 1Ob Was Incomplete Is Erroneous & In Any Case The Appellant Ought To Have Been Given An Opportunity To Rebut & Explain The Incompleteness. 4. The Appellant Craves Leave To Raise Additional Grounds.”

For Appellant: Shri P. Ravichandran, CAFor Respondent: Shri N. Sanjay Gandhi, JCIT
Section 11Section 11(1)Section 11(2)Section 12ASection 143(1)Section 143(1)(a)Section 250

M/S. Kodava Education Society, Ponnampet vs. Assistant Commissioner of Income Tax, Exemptions, Circle-1, Bengaluru

In the result, the appeal filed by the assessee is allowed for statistical purposes

ITA 764/BANG/2024[2017-18]Status: DisposedITAT Bangalore16 Jul 2024AY 2017-18

Bench: Shri Chandra Poojari & Shri Keshav Dubeykodava Education Society Acit (Exemptions), Circle-1 Po Box No. 11, Halligattu Unity Building Annexe Vs. Ponnampet 571216 5Th Floor, Mission Road Pan – Aaaak1322J Bengaluru 560027 (Appellant) (Respondent) Assessee By: Shri Vishal Rao, Ca Revenue By: Shri Ganesh R. Gale, Standing Counsel Date Of Hearing: 28.05.2024 Date Of Pronouncement: 16.07.2024 O R D E R Per: Keshav Dubey, J.M. This Appeal At The Instance Of The Assessee Is Directed Against The Order Of The National Faceless Appeal Centre, Delhi /Cit(A) Under Section 250 Of The Income Tax Act, 1961 (The Act) Vide Din & Order No. Itba/Nfac/S/250/ 2003-24/1061703575(1) Dated 28.02.2024 For Assessment Year (Ay) 2017-18. 2. The Assessee Has Raised The Following Grounds Of Appeal: - “1 The Impugned Order Of The Appellate Commissioner Of Income Tax Is Liable To Set Aside In So Far As The Same Is Incorrect, Irregular, Improper, Unlawful & Oppose To The Law & Facts Of The Case. 2 That The Learned Appellate Commissioner Erred In Not Taking Cognizance Of The Fact That The Appellant Had Committed Certain Errors & Omissions In Filling Up The Return Of Income Which Ought To Have Been Substituted With The Correct Figures To Arrive At The Taxable Income, If Any & As Such The Impugned Order Is Liable To Set Aside.

For Appellant: Shri Vishal Rao, CAFor Respondent: Shri Ganesh R. Gale, Standing Counsel
Section 11Section 11(1)(a)Section 11(1)(d)Section 12ASection 143(3)Section 234BSection 234DSection 250